Q:

What is a grace period for mortgages?

A:

Quick Answer

A grace period is the time between a mortgage payment due date and the day a late fee is assessed. A mortgage payment is the money a person owes the bank that financed the purchase of the home.

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Full Answer

A mortgage payment is typically due once a month, and the exact payment dates depend on the terms of the loan. The grace period is set up to give a person extra time to make his mortgage payment. As long as the payment is made during that grace period, most lenders do not charge late fees, and most banks do not report the person to a collection's agency or the credit bureau. Typically, the grace period for a mortgage is 15 days, so if a mortgage is due on the first of every month, a person must pay his mortgage before the 16th to ensure there is no negative impact to his credit or additional fees applied to the loan. During the grace period, lenders generally mail reminder notices or call the borrower to find out when the payment will be made.

Once a payment is past the grace period, the fees are generally very high. Late payment fees average around 5 percent of the monthly mortgage payment.

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